Supreme Court Stays Section 74 CGST Proceedings in Tata Steel Case: Jurisdictional Threshold and Writ Remedy Under the Scanner
Case Reference
Tata Steel Limited v. Union of India & Ors.
Special Leave Petition (C) No. 16859 of 2026
Supreme Court of India | Order dated May 19, 2026
Background and Context
The intersection of jurisdictional prerequisites under Section 74 of the Central Goods and Services Tax Act, 2017 and the doctrine of exhaustion of alternate remedies has once again come under sharp judicial focus. The Supreme Court of India, while hearing the challenge filed by Tata Steel Limited against proceedings culminating in an Order-in-Original passed under Section 74 of the CGST Act, issued notice to the Respondents and ordered a stay of all further proceedings — at least until the next date of hearing. The matter has been tagged along with another pending Special Leave Petition raising an identical issue.
This intervention by the Apex Court is significant because the Jharkhand High Court had, prior to this, declined to entertain the writ petition filed by the assessee, preferring to relegate it to the statutory appellate mechanism. The Supreme Court's decision to issue notice and impose an interim stay — notwithstanding the availability of an alternative remedy — is being closely read as an indicator of the Court's inclination to examine the broader question of whether writ courts may scrutinise the jurisdictional foundation of Section 74 proceedings at the threshold stage itself.
Factual Matrix
M/s Tata Steel Limited, a public limited company operating its manufacturing facilities at Jamshedpur, found itself at the receiving end of a show-cause notice issued under Section 74 of the CGST Act. The notice was premised on an audit report prepared by the Director General of Audit (Central).
Prior to the issuance of the demand order, the matter had been placed in the Call Book. It was subsequently recalled and revived on the stated ground that the extended period of limitation was approaching expiry, and failure to act would render the demand time-barred. Following this revival, the proper officer passed an Order-in-Original dated December 26, 2025, confirming the demand under Section 74 and holding that the assessee had wrongfully availed Input Tax Credit ("ITC") by reason of fraud, wilful misstatement, and suppression of facts with intent to evade tax.
Aggrieved by this order, the assessee invoked the extraordinary writ jurisdiction of the Jharkhand High Court under Article 226 of the Constitution of India by filing W.P. (T) No. 2485 of 2026. The High Court, vide its judgment dated April 23, 2026, dismissed the writ petition, holding that the Order-in-Original was neither wholly without jurisdiction nor did it involve any patent breach of natural justice that would call for departure from the general rule requiring exhaustion of statutory remedies. The assessee then preferred the present Special Leave Petition before the Supreme Court.
Arguments Advanced Before the Supreme Court
Contentions of the Assessee
The assessee advanced a multi-pronged challenge before the Apex Court:
Absence of Jurisdictional Ingredients: It was urged that the foundational requirements for invoking
Section 74— namely, fraud, wilful misstatement, or suppression of facts to evade tax — were conspicuously absent on the facts of the case. The proper officer had not recorded any satisfaction, on material evidence, regarding the existence of these essential ingredients before issuing the show-cause notice.Tainted Show-Cause Notice: The show-cause notice was stated to be wholly based on an audit report that was itself disputed by the Revenue. Anchoring a
Section 74demand on such a contested audit report was argued to be legally untenable.Abuse of the Call Book Mechanism: The recall of the matter from the Call Book was portrayed not as a bona fide administrative decision, but as a last-minute manoeuvre to circumvent the limitation bar, thereby vitiating the entire proceeding on grounds of natural justice.